Creating a clear and comprehensive partnership agreement and employment contract is one of the most effective ways to avoid disputes or at least provide solutions for these internal problems.

Partnership Agreement

This written contract between business partners will help them resolve disputes and internal problems within the company. Another advantage of this agreement is that each partner will know their rights, duties, liabilities, and responsibilities in their business.

According to corporate lawyers, a partnership agreement allows business owners to create their own policy (as long as this is compliant with the federal and state law) that will meet the needs of their companies. If a business does not have this contract, most aspects in managing an industry will be controlled by the state.

While a partnership agreement should have entries that will meet the specific needs of a business, there are some basic clauses that should be present in the contract regardless of the scale and type of a company.

• Type of business. When deciding for a type of business, it is important to consider the scale of operation, the number of employees, and the nature of the industry.

• Name of partnership. The name of the business should be unique and should not be currently used by other companies. Usually, partners use their last names (e.g. Silverstone & Hawthorne) as a name of their business.

• Decision-making and voting processes. These are important for passing certain decisions that will affect the business.

• Authority of partners. This entry will state if a partner should seek the consent of others for his/her certain actions and decisions that will affect the company.

• Percentage of ownership, shares, and profits. This entry will state the one who will provide the capital, properties, and services—factors that will be used to determine the amount of shares and profits each partner will receive.

Employment Contract

Employment contract, like any partnership agreement, also provides solutions to internal disputes and problems. However, this written agreement is between employers and their workers.

A well-written employment contract includes the worker’s duties, responsibilities, and proper conduct; discrimination and sexual harassment policies; benefits and compensation; and ways to resolve disputes between employers and workers.

The last entry is important since it will provide alternative solutions that will help companies and employees resolve issues without resorting to lawsuits which often take a longer time and is considered to be expensive.

• Mediation through a federal agency. Neutral parties such as the US Equal Employment Opportunity Commission (EEOC) can serve as mediators between workers and the management and help them come up with an agreement that will give them equal benefits.

• Arbitration. Retired judges are often hired to serve as arbitrators; however they should be chosen by both parties. Meanwhile, some companies prefer commercial firms to resolve the internal disputes.

• Negotiation. This process is different from mediation and arbitration since the involved parties will resolve the dispute by themselves without hiring a neutral party. To be considered legal, negotiation should be voluntary and mutual.